International financial strategy

International Financial Strategy Table of Contents Table of Contents 2 Answer1 3 Reasons for which a company cross lists itself 3 Benefits associated with cross listing 5 Costs associated with cross listing 6 Answer 2 7 Identification and explanation of sources of long term finance 7 Identification of the possible rationale for the particular capital structure 9 Calculation of the cost of capital 10 Answer 3 11 Demonstration of the impact of exchange rate volatility 11 Explanation of the mechanism of the money market hedge and forward market hedge 12 Hedging using money market hedge and forward contract 13 Reference List 15 Appendix 17 Answer1 Any company that has operational base in various …

Introduction

Thus it is absolutely important that the companies take precautionary measures to minimize the risks (Bonaccorsi and Daraio, 2009). The present research study elucidates the benefits and costs and advantages that a company can enjoy if it is listed in more than one exchange. British Petroleum is used as an example to show how it finances its long term capital needs. Apart from that effort is also made to present the transaction risk faced by the company. Reasons for which a company cross lists itself A multinational company is spread all across the globe. Due to this reason such a company is involved in multiple numbers of trading relationships across multiple time zones and more importantly in multiple currencies. The company must be listed on the domestic exchange apart from the other foreign exchanges (Chiefele, 2012). The domestic exchange most of the time performs the job for currency exchange. ...

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